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We had one night in Kalaw before our trek to Inle Lake and we mostly stayed at Nature Land 2. They have a handful of sweet little cottages built on a hillside. We ended up in a multilevel cottage with beds upstairs, a sitting room downstairs, and a large bathroom in the middle.
We were surprised to learn that the hotel was no more than two years old, as many of the faucets and fixtures looked like they'd been corroding for years. This was the only bathroom on our trip that smelled like a bathroom. However, the hotel is so moderately priced ($50) that we were happy to overlook this.
At first I was worried that the hotel was too far from town to explore, but the market is just a 10 minute walk downhill and we easily used the hotel as a starting and ending point for a Lonely Planet walking tour that goes right past the hotel.
The one major issue was that we didn't actually get to sleep at the hotel. As we were getting ready for bed and trying to shower, we discovered that we had no hot water. The nice staff tried to fix the tank, but ended up breaking a major pipe and shutting off the water completely. They brought out a plumber, but he said there was nothing that could be done that late at night. So, without any water and no free rooms, the manager found us another room in another hotel. He said he could cover the cost. We ended up at the Junction Rose, which while we were grateful for the room and the hot shower, was a far inferior hotel. We found out that it cost less than what we'd paid for Nature Land 2, so we asked for the difference from Nature Land's manager in the morning. They were happy to accommodate.
Despite this major snafu, we were happy with the staff at Nature Land 2. They were kind and deeply apologetic and bent over backwards to make our late night shift easier. We decided to chalk this up to staying in a mountain town in a developing country.
With this in mind, we would recommend Nature Land 2 as a good option in Kalaw.

This is an excellent place to stay. It's quite new, and has several separate bungalows on a hillside. Very private, and good views. We stayed in one of the large, deluxe bungalows, which has a separate sitting room, and would be ideal for a family with kids. The owner and staff are very accommodating and helpful. It's owned by the same family who owns Natureland I. The two are not very close together, and the mini-bus driver who dropped us off on the highway in Kalaw gave us directions to the wrong one. But the owner was quick to come over and give us a lift in his car. It's a 10 to 15 minute walk into downtown.

the lovely helpful staff, the sunset view in the morning and the beautiful garden

9

Would highly recommend this peaceful hostel. Took us a little while to find but well worth it. We should have stayed longer! The guy at the front desk was one of the nicest guys we met in Myanmar. That's saying something!

I booked for Nature Land II but we were moved to Nature Land I because of a malfunctioning toilet in the last available room. The family who runs the place is extremely helpful and friendly. The villas are in a beautiful lush and quiet setting, but only a 10 minute walk to the centre. At night however, it gets really really cold and the rooms have no heating.